Exhibit 10.39
MODIFICATION TO THE POWER PURCHASE CONTRACT
CAESS-CWEL
BY MEANS OF THIS INSTRUMENT, WE, XXXXXXXX XXXXXXXX XXXXXXXX XXXXXXX, Civil
Engineer, 74 years old, of this domicile, acting on behalf of and in
representation of, in his capacity of President of COMPANIA DE ALUMBRADO
ELECTRICO DE SAN SALVADOR, S.A. DE C.V., of this domicile, hereinafter referred
to as "CAESS" , and, XXXXX XXXXXXX, with a degree in Economics, 36 years old, of
this domicile, acting on behalf of and in representation of, in her capacity as
President and Director of the company CONTINENTAL WASTE CONVERSION DE EL
SALVADOR, S.A. DE C. V., of this domicile, hereinafter referred to as
"GENERATOR" or "CWEL", agree to the following:
ANTECEDENTS
I On December 29, 1995, CAESS together with CONTINENTAL WASTE CONVERSION
INC., domiciled in Calgary, Canada (hereinafter referred to as "CWI')
entered into a CONTRACT FOR THE SUPPLY OF POWER AND ELECTRICAL ENERGY
(hereinafter referred to as the "Original Contract") whereby CWI or its
subsidiary in EI Salvador, is bound to sell to CAESS and CAESS is bound to
buy, the total Net Power Capacity produced by GENERATOR for a term of 15
years, renewable, starting from the Commencement Date specified in clause
4.3 of the referred Original Contract The Original Contract is a B.O.O
type, which initials in English stand for BUILDING, OWNING AND OPERATING.
II On July 16, 1996, CWI notified CAESS of the incorporation of their
subsidiary company in the Republic of EI Salvador, CONTINENTAL WASTE
CONVERSION DE EL SALVADOR, S A de C.V., who would be in charge of
fulfilling the rights and obligations of CWI, pursuant to the terms
contained in the Original Contract .
III On October 10, 1996, the General Law of Electricity was issued (hereinafter
referred to as the "Law"), which determines the obligations, procedures and
regulations to be observed and adhered to by companies generating and
distributing electricity in EI Xxxxxxxx
XX Due to the above circumstances and as agreed mutually by the parties, it is
deemed necessary to modify the Original Contract to reflect these new
circumstances and to better comply with the parties' interests Therefore,
the parties agree upon the following modifications to the Original
Contract.
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MODIFICATIONS TO THE CONTRACT
The Original Contract must be interpreted congruously with these modifications
and in the event of any discrepancy, the provisions contained in this document
shall prevail. For better understanding of this Contract, this document contains
all the provisions agreed upon whereby the clauses preceded by an asterisk (*)
correspond to those of the Original Contract.
ARTICLE 1- DEFINITIONS
GENERATOR'S CREDITORS
means any financial institution, including in an explicit
manner but not limited to the World Bank, the International
Financing Society, the Interamerican Bank for Development or
the Export -Import Bank of the United States of North
America and any investors who may provide financing for
construction and/or permanent financing, including senior
and/or subordinated debt and/or equity for the Generating
Facility.
YEAR
means one calendar year
CONTRACTUAL YEAR
means any period of twelve (12) months commencing on the
Commercial In-Service Date or on its anniversary date.
EXCESS AMOUNT
Its definition is provided in clause 6.4
MINIMUM INTAKE QUANTITY
PER MONTH
Its definition is provided in clause 2.2
INTERNAL LOAD
means the electrical requirements of the Generating
Facility, associated equipment and supporting facilities of
same
LETTER OF CREDIT
means a confirmed, irrevocable and revolving Letter of
Credit issued and payable to GENERATOR by a commercial bank,
which is acceptable to GENERATOR. In accordance to the
Letter of Credit, payments will be made to GENERATOR subject
to solely submitting a certificate to the issuer bank
indicating that a) under this contract, GENERATOR has not
received payment from CAESS (specifying amount); or b) CAESS
has not reissued the Letter of Credit in an amount in United
States currency equal to the original amount of the pending
Letter of Credit, before its expiration or termination; and
c).
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CAESS has received written notice from GENERATOR demanding
that the Letter of Credit will become effective in a maximum
period of 48 hours in the event such default continued The
Letter of Credit must have an expiry date that does not
occur prior to the 12 months following its date of issuance
The Letter of Credit ( or any replacement of the same) will
have to be, in all aspects, both in content and value,
satisfactory to GENERATOR's opinion.
FINANCIAL CLOSURE
Is the execution of financing contracts with Creditors of
GENERATOR and the compliance or waivers of every provision
which is conditional to the availability of funds, in such
contracts.
COLONES
means the legal currency in EI Salvador.
CONTRACT
means the Original Contract together with all its
appendices, the modifications incorporated in this document
and any future amendment done in writing and with the
corresponding approval of the parties.
ORIGINAL CONTRACT
means the contract executed on December 9, 1995 between
CAESS and Continental Waste Conversion Inc.
EMERGENCY
means a condition or situation which affects the ability of
CAESS or GENERATOR or which UT consider that affects the
transmission system to comply with their obligations to
maintain a safe, adequate and continuous electrical service.
ELECTRICAL ENERGY
is defined as the electricity generated by the Generating
Facility and is measured in kilowatt-hour (kWh).
EXECUTION DATE
means the date when the modifications to the Original
Contract established in this document are executed.
POWER FACTOR*
is the quotient by dividing the Electrical Power by the
Apparent Power.
COMMERCIAL IN-SERVICE
DATE
It refers to the date when the Generating Facility is first
brought into commercial service following the Commissioning
Period and the satisfactory compliance of the Steady Power
Test Period and the electrical connection to CAESS as
described in this Contract.
SYNCHRONIZATION DATE
means the date when the Generating Facility is placed in
parallel operation with the transmission system and/or
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CAESS' electrical system.
FORCE MAJEURE
has the meaning assigned in Article I5.
PAYMENT GUARANTEE
means the document described in clause 6.5 (g).
NON-COMPLIANCE
means the occurrence of an event as described in Article 14.
GENERATING FACILITY
means the plant and equipment, owned or leased, by GENERATOR
to generate and supply electrical energy to the Point of
Delivery, which is schematically described in Appendix A.
MONTHLY INVOICE
has the meaning described in Clause 6.5 (g).
MRS - PRICING OF THE
ELECTRICAL ENERGY AT
THE GRID
It will operate based on offers and prices corresponding to
increases or reductions in the amounts of Electrical Energy
determined by the Delivery Schedule and will be operated by
the UT in accordance to the General Law of Electricity.
MONTH OR MONTHLY
means one calendar month.
MODIFICATION TO THE
LAW
Its meaning is explained in Clause 6.6.
POINT OF DELIVERY
means the physical point or points where the Electrical
Energy is supplied to CAESS, described in more detail in
Appendix B.
COMMISSIONING PERIOD
means the period of time following the Synchronization Date
which is before the Commercial In-Service Date, during which
testing of the Generating Facility will be performed by
GENERATOR as per Appendix C The Commissioning Period will
include the verification of the electrical connection
carried out by CAESS.
APPARENT POWER
It is expressed in kilovolt-amperes (kVA) and is the product
of the integrated magnitude of the intensity of the current,
expressed in amperes, by the integrated magnitude of the
voltage, expressed in kilovolts.
ELECTRICAL POWER*
means the integrated value of the power expressed in
kilowatts (KW).
STEADY POWER (BASE LOAD)
means the value of the Generating Facility's Electrical
Power at the time of the Commercial In-Service Date
expressed in kilowatts (kW) and which is determined by a
Steady Power
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Steady Power Test (kV A).
GENERAL POWER
means the Electrical Energy supplied by CAESS at the Point
of Delivery, if necessary, to supply GENERATOR's Internal
Load requirements if it could not be supplied by the
Generating Facility CAESS shall invoice GENERATOR.
OPERATION PROCEDURES
means the procedures to be passed on by CAESS to GENERATOR
as per clause 11, which describes the adequate
interconnection of the Generating Facility with CAESS's
electrical system or the operation procedures contemplated
in UT's Operation Manual for the interconnection to the
national electrical system.
STEADY POWER TEST
is a test performed as per Appendix C, to demonstrate the
Generating Facility's Electrical Power from the time of the
Commercial In-Service Date.
MONTHLY PRICE
Means the agreed upon price in conformity to clause 6 of
this Contract.
SIGET
SUPERINTENDENCIA
GENERAL DE
ELECTRICIDAD y TELECOMUNICACIONES
Government entity responsible for ensuring that the
provisions of the General Law of Electricity are adhered to.
TRIMESTER
means any calendar trimester.
UNIT OF TRANSACTIONS OR
UT
Has the meaning established by the General Law of
Electricity. If it does not work, it will be understood that
it will correspond to the organization in charge of
operating the transmission system.
ARTICLE 2 - PURCHASE AND SALE OF ELECTRICAL ENERGY
2.1 Subject to the terms and conditions contained in this Contract, GENERATOR
is bound to provide CAESS with a steady power of thirty-eight thousand two
hundred and seventy kilowatts (38,270 Kw) for each hour of the day during
the Contractual Year, and in this way, the contracted Electrical Energy at
the Points of Delivery, as detailed in Appendix B of this Contract, will be
calculated, and CAESS is bound to receive and pay the total amount of
Electrical Energy contracted.
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2.2 Subject to the terms and conditions specified in this Contract, commencing
on the Commercial In-Service Date, CAESS will take at any hour of the day
during the Contractual Year, a minimum amount of Steady Power equal to
38,270 kilowatts, which is the Minimum Intake Amount per month, and which
will be calculated as described in Appendix A.
2.3 CAESS will take all the Electrical Energy supplied by GENERATOR after the
Synchronization Date and before the Commercial In-Service Date and will pay
for the Electrical Energy as per the prices indicated in Clause 6 of this
Agreement The Synchronization Date will begin twelve months after this
Contract has been ratified by the Board of Directors of CAESS and the
Commissioning Period will not take more than 15 calendar days.
2.4 GENERATOR, at its own discretion, will be able to sell to third parties any
amount of Electrical Energy generated in excess of the Minimum Intake
Amount.
ARTICLE 3 - PURCHASE AND SALE OF GENERAL POWER
3.1 The General Power will be supplied by CAESS to GENERATOR whenever it is
required by GENERATOR The supply of General Power will be steady and
uninterrupted GENERATOR will pay the price invoiced by CAESS at the end of
the supply period
*3.2 The General Power is for the use of GENERATOR in the operation of the
Generating Facility and shall not be sold or resold directly or indirectly.
ARTICLE 4 - VALIDITY AND TERM OF CONTRACT
4.1 The Original Contract has been in effect since December 29, 1995 and its
terms and conditions will continue to prevail, together with the
modifications agreed to in this Contract and subject to clause 15.3, until
the 15th anniversary of the Commercial In-Service Date At the end of this
period, this Contract can be renewed for the same period of time and will
be governed by the same terms, as agreed to by the parties involved.
4.2 Notwithstanding the foregoing, in the event that:
a) GENERATOR fails to generate any amount of Electrical Energy for three
consecutive months, which is not caused by:
(i) force majeure;
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(ii) any action or omission by CAESS; or
(iii) a moratorium in the terms contained in Clause 13 4;
after giving a 30 day written notice to GENERATOR, CAESS may consider this
contract to be terminated if GENERATOR does not rectify the situation
within the 30 day period.
b) If CAESS fails to pay for Electrical Energy as required by this
Contract, GENERATOR may, within at least five (5) days written notice,
terminate this Contract unless CAESS remedies such breach In the event
of non- compliance, CAESS will not enjoy of this last benefit if they
fail to comply for three times during a Contractual Year.
4.3 The projected Commercial In-Service Date for the Generating Facility will
occur 12 months after all necessary government permits required for the
construction and operation of the Generating Facility have been obtained,
as well as the Transmission Contract, if required
ARTICLE 5 - DELIVERY OF POWER
5. I GENERATOR will supply Electrical Energy in the form of an alternating
current at the voltage of the Points of Delivery as detailed in Appendix B,
and at 60 Hertz. The supplied frequency and voltage will be governed by the
quality standard guidelines agreed upon by SIGET , UT and as determined by
law.
5.2 GENERATOR will, at its expense, make available the interconnection between
the Generating Facility and the system for supplying power of CAESS, as per
Appendix B.
5.3 GENERATOR is bound to provide CAESS with Electrical Energy as per the
guidelines and regulations contemplated in UT's Operations Manual
ARTICLE 6 - RATES, INVOICING AND OTHER CHARGES
6.1 PRICE OF THE ELECTRICAL ENERGY
6. I .I From the Commercial In-Service Date and during the term of this
Contract, the sale price for the Electrical Energy, which will be
applied during the year on January I, will be calculated based on (i)
the average price of the Electrical Energy as per the Pricing of the
Electrical Energy at the Grid (hereinafter referred to as "MRS")
during the preceding year,
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(ii) less colones 0 05 per kWh. The average price ofthe MRS will
be based on the prices published by the "Unit of Transactions"
(hereinafter referred to as "UT") pursuant to the terms and
conditions of the General Law of Electricity During the first
year, the price prevailing for the Electrical Energy shall be
calculated as determined in clause 6.1.4.
6.1.2The sale price for the Electrical Energy shall be adjusted every
year on January I based on the average price of Electrical Energy
in the MRS during the preceding year.
6.1.3During the year when the price for the Electrical Energy,
calculated pursuant to the conditions determined in the preceding
clause becomes effective, the sale price can be automatically
adjusted every three months, as per the following formula
Pen = PEo (MRSn divided by MRSo )
Where
Pen: Adjusted price of the energy
Peo: Current price of the energy
MRSn: Average price of the MRS in the preceding trimester
immediately prior to the date the adjustment is made.
MRSo: Average price of the MRS in the preceding trimester
immediately prior to the date the last adjustment to the
List of Price is made.
The prices referred to in this article may be adjusted by
utilizing the corresponding formula, if and when the
increase or reduction of the adjusted value with respect to
the current value exceeds I 0% of the latter The adjustment
will become effective on the first day of April, July or
October, accordingly
6.1.4The price for the Electrical Energy on the first year counted
from the Date of Commercial In-Service, shall be calculated as
follows:
a) If at the Commercial In-Service Date the MRS remained for
more than 180 consecutive days, the sale price for the
Electrical Energy shall be based pursuant to clause 6 I I
and will prevail until the next quarter price adjustment is
done, and should this adjustment not take place, it shall
prevail until December 31 of the calendar year when the
Commercial In-Service Date took place Beginning on January 1
following the year when the Commercial In-Service Date took
place until the end of the term of this Contract, the price
shall be adjusted pursuant to the conditions determined in
clause 6.1.1.
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b) If at the Commercial In-Service Date the MRS had not been in
operation for 180 consecutive days, the price CAESS shall
pay GENERATOR for the Electrical Energy shall be the price
agreed upon between CAESS and CEL for the sale of Electrical
Energy in BLOCK The price will prevail until the MRS is in
operation for 180 consecutive days During the time when the
above condition is not fulfilled, the sale price for the
Electrical Energy shall be adjusted in the same proportion
as the price to be adjusted for the sale of Electrical
Energy agreed upon by CAESS and CEL.
6.2 AMOUNT IN EXCESS
If during any Contractual Year, GENERATOR delivers to CAESS an amount
in excess of the Minimum Intake Amount (the" Amount in Excess")
required by CAESS which is measured as per Appendix A, CAESS shall pay
GENERATOR on every Contractual Year an amount equal to the product of
(a) the Amount in Excess; and (b ) the average price of the preceding
year determined by the UT Payment shall be made as per the pending
invoice pursuant to the terms in Clause 6.5 of this Contract.
6.3 TAXES ON TRANSFERS OF PROPERTIES AND SERVICES (Iv A )
The price for the Electrical Energy does not include charges
corresponding to the Tax on Transfers of Properties and Services (IV
A), which shall be added by GENERATOR to its invoice, as required by
the Salvadorean law, and shall be paid in accordance to clause 6.5.
6.4 FORM OF PAYMENT
GENERATOR shall invoice CAESS on a monthly basis and at the end of
every Contractual Year, in dollars of the United States of America
(US$) and all payments of invoices shall be made in U S dollars or its
equivalent in Salvadorean Colones For the latter , the exchange rate
that shall prevail for payment of the corresponding invoices shall be
the one utilized for the sale of dollars as published by the Banco
Central de Reserva Those amounts corresponding to IV A tax shall be
paid in Salvadorean Colones.
The parties agree to keep the above reference, which has been agreed
upon by them, fixed as long as the fluctuation ofthe Salvadorean Colon
with respect to the U S dollar does not exceed a percentage equal to
20%, up or down As a result, the relation colon/dollar shall never be
higher than 10 50 colones per dollar, nor lesser than 7 00 colones per
dollar When the fluctuation of the Salvadorean Colon with respect to
the U S dollar exceed the 20% percentage, GENERATOR shall bear the
exchange cost.
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The monthly invoices shall be calculated by multiplying the price
determined in clause 6 I by the Minimum Intake Amount less the amount
equal to the energy not supplied which differs from the Minimum Intake
Amount, taking into account the provisions stated in article 8 with
respect to penalties.
6.5 CONDITIONS OF PAYMENT
CAESS shall pay GENERATOR all amounts owed, as per the following:
a) Within ten (IO) days following the end of the Month or the end of
the Contractual Year, as the case may be, GENERATOR shall submit
its invoice for payment of the previous month's energy supply
(the "Invoicing Month") or for payment for the supply of Amount
in Excess during the preceding Contractual Year, as the case may
be, together with the corresponding documentation to support
GENERATOR's calculations for the invoice Payment of this invoice
on the part of CAESS to GENERATOR shall be made within thirty
(30) days from receipt of the invoice If such payment was not
made within the thirty (30) days period, CAESS will be bound to
pay interest calculated at the prevailing LIBOR rate at six
months plus 5%.
b) * If CAESS, in good faith, does not agree with the amount of the
invoice, it will have fifteen (15) days from the date of receipt
of the invoice to give written notice to GENERATOR regarding the
discrepancy of the invoice and the reasons for it.
c) * Any disagreement to clause 6 5 (b), in conformity do not
release CAESS from its obligation to pay the invoice by the due
date In the case where GENERATOR must reimburse CAESS, a revised
invoice will be issued and CAESS shall receive a credit on the
subsequent monthly invoice, for an amount equal to said
reimbursement, if CAESS has already paid the inaccurate invoice;
if CAESS has not yet done so, CAESS shall then pay the revised
invoice by the due date.
d) * If the disagreement persists, the Parties will attempt to reach
an agreement directly If the Parties cannot reach such an
agreement, they will refer the matter to arbitration as outlined
in Section I 9 of this Contract.
e) * If an error has been made in the invoice, CAESS can request
that GENERATOR correct the error, and if required, make the
corresponding adjustment to the invoice Each time a request for
correction is made, it must be submitted in written form within
ninety (90) days from the date the invoice was paid After the end
of this 90 day period, neither Parties may object to the content
of the invoice.
f) * If it is established that the measuring equipment has a greater
than +-0 2% inaccuracy, the invoices for the sale of Electrical
Energy made during those months corresponding to the inaccurate
measurements must be adjusted
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according to the established margin of error between the +-0 2%
and the corrected value. Each adjustment will be made by adding
or subtracting, whichever the case, the charges on the invoice(s)
which correspond to the second half of the period from the month
in which the existence of error was established, and the month in
which the last calibration of the meter was made in agreement
with Appendix E This adjustment will be reflected on the
invoices.
g) As security for the payment for the supply of Electrical Energy
and Electrical Power during the whole term ofthe Contract, CAESS
will issue and maintain a Guarantee of Payment in favour of
GENERATOR 60 days before the Date of Synchronization Said
Guarantee of Payment is the Letter of Credit described in this
Contract which shall be for an amount equal to the amount
resulting when multiplying (i) such monthly payments applicable
under Clause 6; multiplied by (ii) the Minimum Intake Amount;
multiplied by (iii) twenty five percent (25%) The cost of the
Guarantee of Payment will be the responsibility of CAESS. CAESS
will keep the Guarantee of Payment current and any amount
withdrawn by GENERATOR will have to be replaced within 5 days.
6.6 AMENDMENT TO THE LA W
If, as a result of any amendment to the laws of EI Salvador, including
environmental and fiscal laws, which took place after this Contract
became effective (" Amendment to the Law"), GENERATOR will incur in
important costs additionally to those costs specified in this
Contract, GENERATOR will notify CAESS of such modifications to the law
Said Notice will be delivered on or before the tenth working day after
the last day of each calendar month and will have to specify the
Amendment to the Law, its effect in the profits or expenses paid or to
be paid by GENERATOR and the exact date of such changes in the profits
or expenses as a result of the Amendments to the Law. In this
circumstances, the parties are bound to review together the impact
that such amendment will have on the price and which has not been
reflected in the MRS price.
ARTICLE 7- LIABILITIES
7.1 GENERATOR'S LIABILITIES
7.I.IGENERATOR shall undertake all risk, liability and obligation in
respect to all losses, damages or injuries to:
a) the property of CAESS located on the lands or premises on
CAESS side of the Point of Delivery (hereinafter referred to
as the "Said Lands");
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b) the property of GENERATOR or of any third party on the Said
Lands;
c) any person or persons (including loss of life) on the Said
Lands.
This loss, damage or injury shall have been due to the negligence
of GENERATOR, its employees or agents in the process of supplying
CAESS with Electrical Energy, except to the degree that such
loss, damage or injury shall have been due to the willful acts or
negligence of CAESS, its employees or agents Without limiting the
generality of the foregoing, GENERATOR shall be responsible for
the cost of any damage to its equipment and transformers or any
damage to equipment of a third party or to CAESS electrical
system installed at GENERATOR's side of the Point of Delivery,
that may occur due to the negligent operation of the Generating
Facility by GENERATOR.
*7.I.2 CAESS shall inform GENERATOR as soon as practicable of the claim or
demand and shall give GENERATOR such opportunity as is afforded by
applicable laws to participate in the defense thereof; and further,
such indemnity shall not apply to a claim or demand which is settled
without the consent of GENERATOR.
7.I.3All transmission lines, distribution lines, substations, plants,
meters, data acquisition and computer system facilities and equipment
of CAESS on or in the Said Lands shall be there to manage the delivery
of the Electrical Energy In the case that said equipment is destroyed
or damaged by willful acts or negligence of GENERATOR's employees and
agents, GENERATOR shall pay to CAESS the replacement value of such
equipment or the cost of repairing same, whichever amount is the
lesser.
*7.1.4 GENERATOR shall assume all risk, liability or obligation in respect
to all actions, causes of action, suits, proceedings, claims, demands,
losses, damages, penalties, fines, costs, expenses, obligations and
liabilities arising out of a discharge of any contaminant by GENERATOR
into the natural environment on the Said Lands including any fines or
orders of any kind that may be levied or made pursuant to the
corresponding environmental legislation presently legislated GENERATOR
shall comply at all times with the environmental guidelines issued by
the World Bank, as well as those established by the current applicable
laws of EI Salvador
*7.I.5 GENERATOR's liability as well as CAESS's shall be limited in each
case up to a maximum of USD 10,000,000 on a per case basis Each Party
shall be responsible for its own negligence.
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ARTICLE 8- PENALTIES
8.1 GENERATOR shall deliver on a monthly basis Electrical Energy for an amount
not less than the Minimum Intake Amount. In the event current deliveries of
Electrical Energy by GENERATOR during any month are less than the Minimum
Intake Amount, GENERATOR will deduct from its invoice or monthly statement
the amount equivalent to the energy not supplied and will pay a penalty as
per the provisions stated in this clause. The Deficit shall be equal to the
Minimum Intake Amount less the actual deliveries of Electrical Energy by
GENERATOR less the amount of electrical energy suspended due to force
majeure by virtue of clause 15 GENERATOR shall pay monthly a penalty equal
to the one CAESS has to pay to the final user in accordance to the General
Law of Electricity This penalty shall not be higher than 200% of the price
of the MRS multiplied by the deficit calculated as per this clause, except
in the case of force majeure and following the provisions stated in clause
15 of this Contract.
ARTICLE 9- COVENANTS OF GENERA TOR
9.I GENERATOR shall arrange, at is expense, for the connection between the
Generating Facility and CAESS's electrical supply system or to the national
transmission system, as per Appendix B GENERATOR shall guarantee the
reliability of the interconnection to any of the above systems. In order to
guarantee such efficiency/reliability, GENERATOR shall respect and follow
SIGET's guidelines and regulations as well as UT's Operations Manual.
9.2 GENERATOR accepts to provide, at its expense, all power system components
on GENERATOR ' s side of the Delivery Point, including transformers,
switching and auxiliary equipment such as synchronizing and protection and
control equipment, pursuant to requirements mutually agreed upon by the
Parties, as considered reasonably necessary to protect the safety and
security of both Parties' power system Without limiting the generality of
the foregoing, the said required equipment will include such equipment as
may be necessary to provide for voltage conversions or to correct operation
of GENERA TOR ' s synchronizing, control or protection equipment as it
might affect CAESS equipment and personnel safety and CAESS's customers All
said equipment of GENERATOR shall be subject to the approval of CAESS and
such approval cannot be unreasonably withheld and shall be installed,
maintained and operated in accordance with equipment manufacturer's
recommendations GENERATOR and CAESS shall work as a team during the
installation of the electrical equipment of the Generating Facility
9.3 CAESS shall install, operate and maintain the metering electrical system in
accordance to Appendix E.
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*9.4 GENERATOR agrees to provide, free of charge or rent, a convenient and safe
space for the metering, communication, and other access equipment of CAESS
in GENERATOR's premises and further agrees that only properly authorized
agents of CAESS or persons otherwise lawfully entitled to do so shall be
permitted to read, inspect, repair, adjust or remove any of the said
metering and communication equipment and that the properly authorized
agents of CAESS shall, at all reasonable hours, have the right to read,
inspect, repair, adjust, replace or remove any of the said metering and
communication equipment and they will provide a permit to access said
premises. The metering equipment of both Parties shall be calibrated
jointly.
9.5 GENERATOR agrees that if this Contract is terminated in accordance with the
terms of this Contract or for any other legal ground, CAESS may enter on
GENERA TOR ' s premises and remove therefrom meters, lines, stations,
plant, equipment and appliances installed thereon and owned by CAESS.
9.6 GENERATOR shall comply with all applicable governmental regulations as well
as SIGET's regulations and will follow UT's Operations Manual, and shall be
subject to obtain and maintain in good standing, whenever required, all
licenses, permits and approvals from any and all governments, governmental
commissions, boards or agencies required in respect of its operations,
including, without limitation, the construction of the Generating Facility
and its connections to the national electrical system or to CAESS
electrical system.
*9.7 GENERATOR shall install safety equipment to protect its own property and
equipment for variations in frequency and voltage or from temporary
delivery of other than three-phase power, whether caused by the Generating
Facility or CAESS' distribution system.
9.8 GENERATOR accepts to operate its Generating Facility at Steady Power
(BaseLoad) following the minimum required standards as per UT's Operations
Manual.
9.9 GENERATOR shall keep proper records relating to the production of
Electrical Energy as reasonably required by CAESS in form and detail
satisfactory to CAESS, and shall retain such records for a period of not
less than three (3) years counted from the first day of the Contractual
Year.
9.10 GENERATOR shall employ qualified personnel for monitoring the Generating
Facility and for coordinating operations of the Generating Facility with
CAESS system GENERATOR shall ensure that such personnel are available at
all times Electrical Energy is being generated.
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ARTICLE 10- OBLIGATIONS
10.1 OBLIGATIONS OF CAESS
10.1.1 CAESS agrees that it will:
a) maintain a take or pay obligations for the contracted Electrical
Energy in the manner indicated by this Contract, except in cases
of force majeure;
b) * provide GENERATOR with all information GENERATOR may require
and that may affect the operation ofthe Generating Facility;
c) maintain the Letter of Credit referred to in Section 6.5 (g)
during the entire term of this Contract and according to the
terms of the same;
d) not require GENERATOR to supply Electrical Energy at a Power
Factor outside ofthe capability curves of its Turbo Generators.
10.2 OBLIGATIONS OF GENERATOR
10.2.1 GENERATOR agrees to
a) In case it does not deliver the Minimum Intake Amount, it will
pay the penalty stipulated in Article 8 of this Contract and it
will discount the monthly invoice by the quantity that
corresponds to the energy not delivered in accordance with the
Minimum Intake Amount. The exception is represented by the cases
of Force Majeure.
b) * Provide CAESS with all the information available which may
affect the Generating Facility.
c) Will not supply Electrical Energy at a Power Factor outside the
capacity curves of its turbo-generator.
d) will comply with all the regulations of the country, the Law of
Electricity and of UT and CAESS's rules.
ARTICLE 11- OPERATING PROCEDURES
11.1 In the event GENERATOR interconnects to CAESS's electrical system, CAESS
shall provide GENERATOR with a copy of its substation's Manual of
Operations as soon as possible and such Manual will provide the basis for
the Operating
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Procedures to be agreed upon by the Parties The operating procedures
shall address the interconnection and the integration of the
installation of the Generating Facility into CAESS's electrical system
Topics covered may include, without limitation, method of day-to-day
communications; key personnel list for both Parties' operating
centres; authorization and commutation procedures; outage scheduling
and reactive power support.
In the event the interconnection is through the national electrical
system, GENERATOR is bound to comply with UT's Operations Manual with
the purpose of ensuring the optimization of the delivery and to
guarantee the operation of the national electrical system.
11.2 As part of the finalization of operating procedures, each Party shall
designate in writing to the other Party the name of the employee or agent
to whom notices are to be given, and in default of such designation or in
the event of the said employee or agent not being immediately available to
receive any such notice, such Party agrees the notice may be given by
telephone or otherwise to any other responsible employee or agent of the
other Party.
* ARTICLE 12- PRE-OPERATION PERIOD
*12.IGENERATOR shall notify CAESS and to UT in writing at least twelve
(12)business days prior to the proposed Synchronization Date In no event
shall the Synchronization Date be less than twelve (12) business days prior
to the Commercial In-Service Date CAESS shall have the right to have
representatives present at the Generating Facility at the Synchronization
Date.
12.2 The Synchronization of the Generating Facility into CAESS's electrical
system does not occur on the Synchronization Date proposed by GENERATOR in
the notice delivered to CAESS pursuant to Clause 12 for any reason
attributable to CAESS, its employees or agents, GENERATOR shall be entitled
to an indemnification from CAESS, equivalent to the value of one day of
Electrical Energy, calculated as per the provisions stated in this
Contract, for each day of delay.
* ARTICLE 13- OPERATION OF THE GENERATING FACILITY
*13 I GENERATOR shall operate its Generating Facility so that, except for
normal operating conditions, variations of frequency or voltage shall be
within normal operating ranges acceptable to UT, SIGET and the Law of
Electricity.
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*13.2GENERATOR shall take remedial measures, at its own expense, by way of
installing suitable apparatus or otherwise as may be necessary to maintain
voltage and frequency, in order to reduce any fluctuations, interruptions
or interference with the communication systems or control circuits.
*13.3GENERATOR shall adjust exit control to CAESS's requirement or of the
transmission company or to the national electrical system in an acceptable
manner to contribute in the regulation of voltage of CAESS's electrical
system, as set out in the Operations Procedures of CAESS and in the UT
Operations Manual.
13.4 Either Party shall have the right to interrupt the supply of Electrical
Energy or receipt of General Power at any time to the extent necessary to
safeguard life or property or for the purpose of construction, maintenance,
operation, repair, replacement or extension of their equipment or works
Either Party shall limit the duration of such interruptions as much as
practicable and, except in emergencies, shall give to the other Party
adequate warning of its intention to interrupt the supply The Parties shall
coordinate common maintenance schedules And both GENERATOR and the
distributor shall comply with the provisions stated in articles 8 and 10,
respectively.
*13.5 GENERATOR shall cooperate with CAESS in establishing Emergency plans,
including recovery from a total electrical interruption; voltage reduction
of non-essential auxiliary equipment in order to accomplish a reduction in
the flow of electricity; and other plans which may arise GENERATOR shall
make technical references available concerning start-up times, black-start
capabilities and minimum load-carrying ability.
13.6 GENERATOR shall, during an Emergency, supply Electrical Energy as the
Generating Facility is able to generate and CAESS is able to receive If
GENERATOR has a scheduled outage, and such scheduled outage occurs or would
occur coincident with an Emergency, GENERATOR shall make its best efforts
to reschedule the outage or, if the outage has begun, to expedite the
completion thereof.
*13.7CAESS may from time to time make tests to determine the electrical
characteristics of the Generating Facility and may, at its own cost and
expense, install and use meters and equipment which it deems necessary to
establish the basis of billing.
ARTICLE 14- LACK OF PERFORMANCE UNDER THIS CONTRACT
14.1 Pursuant to Clause 14 5 of this Contract, in the event GENERATOR fails to
perform any obligation under this Contract, CAESS may give written notice
to GENERATOR that unless the obligation is completely fulfilled within a
period of
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30 days after delivery of the notice, CAESS shall discontinue
receiving Electrical Energy or supplying General Power until GENERATOR
has rectified the problem, at which time, CAESS shall reconnect the
Generating Facility to its grid The right to discontinue receiving
Electrical Energy or supplying General Power in this section is in
addition to and not in limitation of any other right provided
elsewhere in this Contract to discontinue receiving Electrical Energy
or supply of General Power.
14.2 If at any time GENERATOR fails to comply with any of its obligations
affecting operation of CAESS's electrical system, including failing to
operate as required by this Contract or by any operating procedures
pursuant to the Operations Procedures, CAESS may give notice thereof to
GENERATOR, which notice may be given by telephone to the Plant Manager or
Shift Operator of GENERATOR, as specified in Article I I 2, and GENERATOR
shall immediately commence to remedy the said failure In case of continued
failure for more than thirty minutes after the notice, CAESS may
discontinue the receipt of all Electrical Energy or supply of General Power
or any part thereof and shall not be obliged to resume receipt of
Electrical Energy or supply of General Power until GENERA TOR has remedied
the failure.
14.3 If at any time CAESS fails to perform any of its obligations affecting the
operation of the Generating Facility, including failing to operate as
required by this Contract or by any operating procedures pursuant to the
Operations Procedures, GENERATOR may give written notice thereof to CAESS,
which notice may be given by telephone to the persons referred to in Clause
I I 2, and CAESS shall immediately commence to remedy the said failure In
case of continued failure for more than thirty minutes after the notice,
GENERATOR may discontinue the supply of all Electrical Energy or receipt of
General Power until CAESS has remedied the failure.
14.4 Any of the following topics discussed below will constitute breach of
Contract:
a) Material breach of any of the Parties' obligations pursuant to this
Contract;
b) Any declaration made by any of the Parties that proves to be incorrect
in any material aspect;
c) Dissolution, termination of business or voluntary or involuntary
bankruptcy of any of the Parties; and,
d) In the case CAESS loses its license to provide electrical service such
that it cannot distribute Electrical Energy generated by the
Generating Facility. The above mentioned event will not constitute
grounds for default on the part of CAESS if and when this Contract
(including the Letter of Credit) is assigned to a successor who
GENERATOR, at its own discretion, may deem capable of complying with
all of CAESS's obligations pursuant to this Contract.
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14.5 In the event of default and if this default continued, the Party not in
default shall adhere to the following rights granted by this Contract and
which are referred to in the different clauses of this Contract, may take
the following actions:
a) Give written notice to the Party in default indicating the
circumstances behind such default Thereupon and for a period of not
less than thirty (30) days following the receipt of such notice, the
Parties will have to consult with each other to consider the actions
to be taken in order to alleviate the consequences of such default.
b) After the thirty (30) day period has elapsed, if such default has not
been remedied during such period of time or during an extended period
necessary under the circumstances, the Contract will be terminated
(unless the Parties have agreed to the contrary) by means of a written
notice to the Party in default The Party not in default will be
relieved from every obligation and responsibility acquired through
this Contract, except for the payment of any amount due or for any
liability acquired as a result from any action, omission or event
which occurred before the termination date.
c) Will have the right or recourse based on the law or fairness,
including compensation for monetary damages, temporary suspensions or
forced fulfillment of its contractual obligations.
14.7 In addition to that indicated in Clause 14.6:
a) In the event CAESS failed to comply, GENERATOR may, at its sole and
absolute discretion and under an agreement or otherwise, sell or
contract or agree to the sale of all or any portion of the Electrical
Energy to third parties, and if GENERATOR terminates this Contract in
accordance to Clause 14.6, GENERATOR shall immediately request and
will be authorized to receive payment from CAESS for damages, pursuant
to the provisions stated in Article 1427 ofthe current Civil Code in
the Republic of EI Salvador (please refer to Appendix F).
b) If GENERATOR failed to comply, CAESS shall, in addition to
givingwritten notice to GENERATOR, notify the Creditors of such
default and the Creditors shall have the same 30 day period to remedy
GENERATOR's default or an extended period of time as may be reasonably
necessary in order to remedy such default.
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ARTICLE 15- FORCE MAJEURE
15.1 The Parties shall not be responsible for default ofthe obligations
established in this Contract for reasons of force majeure or unforeseen
circumstances such as war, invasion, rebellion, civil unrest, revolts,
riots, sabotage, floods, earthquakes, fires and other similar occurrences.
15.1 BIS - Neither ofthe parties to this Contract shall be authorized to benefit
from the provisions indicated in Clause I 5 I under the following
circumstances:
a) If default was caused by the negligence of the Party claiming Force
Majeure; or
b) If default was caused by the Party claiming Force Majeure, who did not
attempt to diligently implement measures to remedy the situation and
to promptly recommence compliance with its obligations.
*ARTICLE 16- DIVISIBILITY OF THE CONTRACT
*16.1If any of the terms, covenants or conditions of this Contract, under any
circumstances become invalid or unenforceable, the rest of this Contract
shall remain in full force and effect subject to any necessary adjustments
to replace any of the above-mentioned invalid or unenforceable provisions.
*ARTICLE 17- WAIVER
*17.1The waiver of the right to protest against violations or default of any of
the terms, provisions or covenants contained in this Contract, shall not be
considered or interpreted as waiver of the right to protest against any of
the terms, provisions or covenants contained in this Contract, and a
decision to refrain from making use of one or more of the recourses
stipulated in this Contract in cases of default, shall not be considered or
interpreted as waiver of the right to protest against said default.
ARTICLE 18- PREVIOUS CONTRACTS
18.1 This document contains all of the terms and conditions agreed upon by the
Parties, which includes the terms and conditions set out in the Original
Contract which have not been modified, as well as the amendments agreed to
herein. No other contract held prior to the date of the Original Contract,
either written or verbal, referring to the subject matter of this Contract,
shall be considered in effect or binding to either Party In the event of a
contradiction between the terms agreed upon in the Amended Contract and the
Original Contract, the terms and conditions established in this Amended
Contract shall prevail.
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*ARTICLE 19- CONTROVERSIES AND ARBITRATION
*19.1Any doubt or controversy that may arise between the Parties regarding the
interpretation, fulfillment or execution of this Contract, shall in the
first instance be resolved in either ofthe following ways:
a) by the Management of each of the Parties; or
b) by the Presidency of the Executive Committee of each contracting
company, who will be notified in the event that the Management of each
Party do not reach an agreement.
*19.2If a dispute is not resolved through the negotiations referred to in
Article 19 I, the dispute will be referred to arbitration, which shall be
carried out in accordance with the rules established by the International
Chamber of Commerce in Paris. Such arbitration shall take place in the city
of Miami, Florida in the United States Each Party shall name an arbitrator,
and the chosen arbitrators shall in turn nominate a third arbitrator; if
the chosen arbitrators do not agree upon the naming of a third arbitrator,
one will be appointed by the International Chamber of Commerce in Paris.
The decision of the arbitrators will be final and binding on the Parties
hereto.
19.3 CAESS unconditionally and irrevocably agrees that the execution, delivery
and fulfillment of this Contract on the part of CAESS constitutes private
and commercial acts, and not public or governmental acts Furthermore,
CAESS, as a private company, declares that it shall not enjoy any sovereign
immunity or procedural privileges instituted by any special laws.
ARTICLE 20- NOTICES AND CONFIDENTIALITY
20.1 Any formal notices exchanged between the Parties shall be delivered by
telefax or telecopy and confirmed in writing, upon request of the
interested Party, to the following addresses:
CONTINENT AL WASTE CONVERSION DE EL SALVADOR, S A DE C V
89 Avenida Norte, No 561, Colonia Escalon, San Salvador, EI Salvador
Telephone (000) 000-0000
Facsimile (000) 000-0000
COMPANIA DE ALUMBRADO ELECTRICO DE SAN SALVADOR, SA DE CV
(CAESS)
Blvd Los Heroes, Edificio CAESS, San Salvador, EI Salvador
Telephone (000) 000-0000
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*20.2This Contract shall remain confidential between the Parties and their
professional advisors, except in accordance with internal requirements or
for purposes of financing, and except insofar as the Parties are required
by law to disclose such Contract.
ARTICLE 21- MISCELLANEOUS PROVISIONS
21.1 This Contract is intended exclusively for the benefit of the Parties hereto
Nothing in this Contract shall create any obligation or responsibility to
any person not a Party to this Contract.
"21.2This Contract shall not be interpreted or utilized to create an
association, joint venture or alliance between the Parties or to impose any
obligation or responsibility to the Company on either of the Parties.
Neither Party has the right, power or authority to agree in name of or as
an agent or representative of the other Party.
"21.3Both Parties shall produce and deliver, or shall cause to be produced and
delivered, all documents and future deeds (including certificates,
declarations and affidavits) and any other similar documents, as per any
reasonable requests made by the other Party for the purpose of giving
validity to this Contract and/or to establish compliance with the
representations, covenants and conditions of this Contract.
"21.4The division of this Contract into Articles and the use of headings herein
are solely for the purposes of convenience and shall not affect the
interpretation of same. Any reference in this Contract to an act, statute
or section shall be considered as a reference to said act, statute or
section as may be amended or enforced from time to time. Any words in
singular form signify the same in plural form, and vice versa.
"21.5Except as otherwise herein provided, this Contract shall be governed and
interpreted by the applicable laws of the Republic of EI Salvador, and the
Courts to which the Parties will be subject shall be those based in San
Salvador.
ARTICLE 22- SUCCESSORS AND ASSIGNS
22.1 This Contract shall extend to and be binding upon CAESS and GENERATOR, and
to their respective successors and authorized assigns, with the
understanding that GENERATOR shall not assign its interest in this Contract
or any part thereof, without the written consent of CAESS or vice versa.
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ARTICLE 23- GUARANTEES AND REPRESENTATIONS
23.I GENERATOR represents and guarantees to CAESS the following
a) GENERATOR is a Corporation of Variable Capital, legally
incorporated, validly existing and duly accredited, under the
laws of the Republic of EI Salvador, that it is validly existing
and duly accredited to carry out acts in the whole territory of
EI Salvador and abroad, and that GENERATOR has the power and
authority to conduct its business, to retain the ownership of its
property and to hold, deliver and comply with its obligations
under this Contract.
b) The execution, delivery and fulfillment by GENERATOR of this
Contract has been duly authorized through the necessary corporate
procedures, whereby it shall not (i) require any consent or
approval from the Board of Directors or shareholders of
GENERATOR, or from any third party, other than that which has
already been obtained (proof of such consent and approval must be
provided to CAESS if it has not yet received same); (ii) result
in or constitute default under any provisions of the
constitutional documents of GENERATOR or any Deed or contract to
which GENERATOR is a party, or by that which GENERATOR or its
agents might be obligated or subjected; or violate a law, rule,
regulation, order, mandate, sentence, decree, determination or
finding currently in full force and effect and applicable to
GENERATOR; or (iii) result in the creation or imposition of any
tax on GENERATOR's property.
c) This Contract constitutes a legal, valid and mandatory obligation
for GENERATOR, and the required fulfillment of such against
GENERATOR will be in accordance with the terms of this document.
d) All necessary government authorizations related to the proper
execution and delivery by GENERATOR of this Contract have been
duly obtained or created and are now in full force and effect.
e) There are no pending legal or judicial actions, lawsuits or
proceedings (nor have any been threatened, to the knowledge of
GENERA TOR), nor any before any government body having
jurisdiction over GENERATOR, that are against or affecting
GENERATOR or any of its property, titles or assets, which, in the
event of an adverse determination, would have a material and
negative effect on (i) GENERATOR's financing conditions, profits
or operations; or (ii) GENERATOR's ability to carry out the
transactions considered in this Contract.
23.2 Both GENERATOR and CAESS shall preserve and maintain in full force and
effect their existence, as well as all the government authorizations
necessary for the adequate operation of their business, including the
fulfillment of this Contract.
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23.3 CAESS shall make its best efforts to execute, deliver and acknowledge
receipt of any instruments and documents, to implement any modification of
this Contract and to take any necessary action to satisfy any reasonable
request made in writing from any Creditor or prospective Creditor with
respect to the financing of the Generating Facility The aforementioned
shall not be interpreted as a request for CAESS to implement, acknowledge
receipt of and deliver any other document, or to take any other necessary
actions which are inconsistent with its rights under this Contract or which
are specifically subject to its consent or approval under this Contract,
except that CAESS shall carry out all reasonable efforts to deliver any
other instruments or documents, or take any other actions, which are
consistent with the routine requests by the Creditors with respect to the
financing of similar projects.
23.4 MOST FAVOURABLE CONDITIONS
a) GENERATOR is obligated to grant to CAESS the same conditions,
terms and price which by virtue of the Power Purchase Contract it
would grant to any other distributor, when such conditions, terms
and price are considered by CAESS as more favourable than the
conditions, terms and price agreed to in this Contract The new
conditions shall become valid fifteen ( I 5) days after CAESS
request them from GENERATOR in writing.
23.5 RIGHT OF PREFERENCE
CAESS is obligated to grant to GENERATOR the preferential right
to supply any amount of Electrical Energy that might be required
in the future in excess of the contracted amounts agreed upon by
GENERATOR and CEL. GENERATOR must reply as to whether it will
accept the offer to purchase, no later than twenty (20) days from
the date GENERATOR receives the written request made by CAESS The
conditions, terms and price of the new Contract shall be agreed
upon independently of the covenants contained in this Contract.
ARTICLE 24- PREVIOUS CONDITIONS
24.1 Without prejudice to any of the other provisions stipulated in this
Contract, GENERATOR and CAESS agree that the following events constitute
previous conditions to the implementation of GENERATOR's obligations under
this Contract:
24.I.I The implementation of a Fuel Supply Contract that is acceptable to
GENERATOR entirely at its discretion;
24.1.2 GENERATOR obtaining all necessary land transfers, leases, obligations,
licenses, rights of way or other documents related to GENERA TOR ' s real
estate, that may
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be necessary or desirable, entirely at the discretion of
GENERATOR, for the development, ownership, operation and
financing of the Generating Facility; and,
24.1.3 The ratification by GENERATOR's Board of Directors of the agreements that
modify the Original Contract.
24.2 Without prejudice to any of the other provisions stipulated in this
Contract, GENERATOR and CAESS agree that the following events constitute
previous conditions to the implementation of CAESS' s obligations under
this Contract:
24.2.I The ratification by the Board of Directors elected by the shareholders
which have acquired the shares of CAESS, of the agreements that modify the
Original Contract In the event that said Board of Directors does not ratify
the terms of this amendment, the Board of Directors shall indicate the
specific items with which it is in disagreement, in order to initiate
negotiations immediately.
The term of this ratification will be a maximum of two (2) months from the
Election of the new Board of Directors of CAESS.
By virtue of the stipulations contained in this Article, the durations
agreed to in this Contract shall come into effect following the
ratification established in Article 24.2.I.
CAESS and GENERATOR agree to the terms and conditions of this Contract, in the
City ofSan Salvador, this 12th day of November, 1997.
(Signed) (Signed)
Xxxxxxxx Xxxxxxxx Xxxxxxxx Xxxxxxx Xxxxx Xxxxxxx
CAESS CWEL
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